Institutionalising ‘Waqf’ for Realising the Shared Development Objective by Islamic Banks and Financial Institutions

Muhammad Ayub
Published Online: December 2018
Abstract

Islamic financial system has evolved since last four decades with the objective to do justice to all economic agents in an economy. But, the Islamic banks and financial institutions (IBFIs) have been working on the conventional paradigm by replicating the interest based products. Justifying the contracts on the basis of legal form, without ensuring the underlying real spirit of the transactions [economic substance], amounts to abusing the Sharīʿah principles (Dusuki and Abdullah, 2009, Hanif, 2016)). Waqf is a civil societal institution and a crucial part of the ‗virtuous sector‟ of Islamic economy. It involves voluntary charity of perpetual tendency for benefit of mainly the poor. This editorial explores the areas that might be helpful in revitalisation of the institution of waqf by involving banks and other financial institutions for sustainable socio economic development of society and the economy. Based on the available literature, it suggests that establishing and running awqāf at macro and micro levels has to be a common feature of the Muslim society, while banks may facilitate in establishing and running such awqāf. This way, Islamic banks and financial institutions could make visible contribution through innovation and entrepreneurship. The editorial may help the IBFIs and the regulators, as also the researchers, to restructure the banking and non-banking financial institutions for benefiting from the potential of waqf for welfare of the poor and vulnerable sections of the societies at broader levels.


Keywords

Islamic Banks, CSR, Shared Prosperity, Waqf, Philanthropy, Microfinancing..